To explain:
The reasons
Explanation of Solution
Demand for factors is the demand for factor inputs at different factor prices.Demand for a good is the quantity demanded of a good at different prices of that good.
A higher demand for a good implies that the production of that good increases. As a result, the demand for factor inputs required for production of that good increases. This means that demand for factor inputs is derived from the demand of the goods in production of which those factors are employed. Hence, factor demand is derived demand.
Demand for factors:It is the demand for factor inputs at different factor prices.
Demand for good:It is the quantity demanded of a good at different prices of that good.
Derived demand:When the demand for a good or service arises as the outcome of the demand for another good or service, it is referred as derived demand.
Want to see more full solutions like this?
Chapter 14 Solutions
Principles of Economics (Second Edition)
- Economics (MindTap Course List)EconomicsISBN:9781337617383Author:Roger A. ArnoldPublisher:Cengage Learning
- Exploring EconomicsEconomicsISBN:9781544336329Author:Robert L. SextonPublisher:SAGE Publications, Inc